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StandardAudit and Assurance

October 2016

International Standard on Auditing (UK) 805 (Revised)Special Considerations—Audits of Single Financial Statements and Specifi c Elements, Accounts or Items of a Financial Statement

Financial Reporting Council

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INTERNATIONAL STANDARD ON AUDITING (UK) 805 (REVISED)

SPECIAL CONSIDERATIONS—AUDITS OF SINGLE FINANCIAL STATEMENTS AND SPECIFIC ELEMENTS, ACCOUNTS OR ITEMS

OF A FINANCIAL STATEMENT

(Effective for audits for periods commencing on or after 1 January 2017)

CONTENTS

Paragraph

Introduction

Scope of this ISA (UK) ......................................................................................................... 1–3

Effective Date ....................................................................................................................... 4

Objective ............................................................................................................................. 5

Definitions ........................................................................................................................... 6

Requirements

Considerations When Accepting the Engagement .............................................................. 7–9

Considerations When Planning and Performing the Audit ................................................... 10

Forming an Opinion and Reporting Considerations ............................................................. 11–17

Application and Other Explanatory Material

Scope of this ISA (UK) ......................................................................................................... A1–A4

Considerations When Accepting the Engagement .............................................................. A5–A9

Considerations When Planning and Performing the Audit ................................................... A10–A15

Forming an Opinion and Reporting Considerations ............................................................. A16–A28

Appendix 1: Examples of Specific Elements, Accounts or Items of a

Financial Statement

Appendix 2: Illustrations of Auditor's' Reports on a Single Financial

Statement and on a Specific Element of a Financial Statement

International Standard on Auditing (UK) (ISA (UK)) 805 (Revised), Special Considerations—Audits of

Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement, should

be read in conjunction with ISA (UK) 200 (Revised June 2016), Overall Objectives of the Independent

Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing (UK).

Introduction

Scope of this ISA (UK)

1. The International Standards on Auditing (UK) (ISAs (UK)) in the 100–700 series apply to an audit

of financial statements and are to be adapted as necessary in the circumstances when applied

to audits of other historical financial information. This ISA (UK) deals with special considerations

in the application of those ISAs (UK) to an audit of a single financial statement or of a specific

element, account or item of a financial statement. The single financial statement or the specific

element, account or item of a financial statement may be prepared in accordance with a general

or special purpose framework. If prepared in accordance with a special purpose framework, ISA

(UK) 800 (Revised)1 also applies to the audit. (Ref: Para. A1–A4)

2. This ISA (UK) does not apply to the report of a component auditor, issued as a result of work

performed on the financial information of a component at the request of a group engagement

team for purposes of an audit of group financial statements (see ISA (UK) 600 (Revised June

2016)).2

3. This ISA (UK) does not override the requirements of the other ISAs (UK); nor does it purport to

deal with all special considerations that may be relevant in the circumstances of the engagement.

Effective Date

4. This ISA (UK) is effective for audits of single financial statements or of specific elements, accounts

or items for periods commencing on or after 1 January 2017, early adoption is permitted.2a In the

case of audits of single financial statements or of specific elements, accounts or items of a

financial statement as at a specific date, this ISA (UK) is effective for audits of such information

as at a date on or after 1 January 2017, early adoption is permitted.2a

Objective

5. The objective of the auditor, when applying ISAs (UK) in an audit of a single financial statement

or of a specific element, account or item of a financial statement, is to address appropriately the

special considerations that are relevant to:

(a) The acceptance of the engagement;

(b) The planning and performance of that engagement; and

(c) Forming an opinion and reporting on the single financial statement or on the specific

element, account or item of a financial statement.

1 ISA (UK) 800 (Revised), Special Considerations—Audits of Financial Statements Prepared in Accordance with Special

Purpose Frameworks

2 ISA (UK) 600 (Revised June 2016), Special Considerations—Audits of Group Financial Statements (Including the Work of

Component Auditors)

2a Where ISA (UK) 805 (Revised) is adopted early for the audit of Solvency II Regulatory Returns for periods commencing

prior to 1 January 2017 it may be used in conjunction with ISAs (UK and Ireland) where the audit of the statutory financial

statements for the same period was conducted in accordance with ISAs (UK and Ireland).

ISA (UK) 805 – Revised

Definitions

6. For purposes of this ISA (UK), reference to:

(a) "Element of a financial statement" or "element" means an "element, account or item of a

financial statement;"

(b) "International Financial Reporting Standards" means the International Financial Reporting

Standards (IFRSs) issued by the International Accounting Standards Board; and

(c) A single financial statement or to a specific element of a financial statement includes the

related disclosures. (Ref: Para. A2)

Requirements

Considerations When Accepting the Engagement

Application of ISAs (UK)

7. ISA (UK) 200 (Revised June 2016) requires the auditor to comply with all ISAs (UK) relevant to

the audit.3 In the case of an audit of a single financial statement or of a specific element of a

financial statement, this requirement applies irrespective of whether the auditor is also engaged

to audit the entity's complete set of financial statements. If the auditor is not also engaged to audit

the entity's complete set of financial statements, the auditor shall determine whether the audit of

a single financial statement or of a specific element of those financial statements in accordance

with ISAs (UK) is practicable. (Ref: Para. A5–A6)

Acceptability of the Financial Reporting Framework

8. ISA (UK) 210 (Revised June 2016) requires the auditor to determine the acceptability of the

financial reporting framework applied in the preparation of the financial statements.4 In the case

of an audit of a single financial statement or of a specific element of a financial statement, this

shall include whether application of the financial reporting framework will result in a presentation

that provides adequate disclosures to enable the intended users to understand the information

conveyed in the financial statement or the element, and the effect of material transactions and

events on the information conveyed in the financial statement or the element. (Ref: Para. A7)

Form of Opinion

9. ISA (UK) 210 (Revised June 2016) requires that the agreed terms of the audit engagement

include the expected form of any reports to be issued by the auditor.5 In the case of an audit of a

single financial statement or of a specific element of a financial statement, the auditor shall

consider whether the expected form of opinion is appropriate in the circumstances.

(Ref: Para. A8–A9)

Considerations When Planning and Performing the Audit

10. ISA (UK) 200 (Revised June 2016) states that ISAs (UK) are written in the context of an audit of

financial statements; they are to be adapted as necessary in the circumstances when applied to

3 ISA (UK) 200 (Revised June 2016), Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance

with International Standards on Auditing (UK), paragraph 18.

4 ISA (UK) 210 (Revised June 2016), Agreeing the Terms of Audit Engagements, paragraph 6(a).

5 ISA (UK) 210 (Revised June 2016), paragraph 10(e).


audits of other historical financial information.6,7 In planning and performing the audit of a single

financial statement or of a specific element of a financial statement, the auditor shall adapt all

ISAs (UK) relevant to the audit as necessary in the circumstances of the engagement.

(Ref: Para. A10–A15)

Forming an Opinion and Reporting Considerations

11. When forming an opinion and reporting on a single financial statement or on a specific element

of a financial statement, the auditor shall apply the requirements in ISA (UK) 700 (Revised June

2016),8 and, when applicable, ISA (UK) 800 (Revised) adapted as necessary in the circumstances

of the engagement. (Ref: Para. A16–A22)

Reporting on the Entity's Complete Set of Financial Statements and on a Single Financial Statement

or on a Specific Element of Those Financial Statements

12. If the auditor undertakes an engagement to report on a single financial statement or on a specific

element of a financial statement in conjunction with an engagement to audit the entity's complete

set of financial statements, the auditor shall express a separate opinion for each engagement.

13. The audited single financial statement or the audited specific element of a financial statement

may be published together with the entity's audited complete set of financial statements. If the

auditor concludes that the presentation of the single financial statement or of the specific element

of a financial statement does not differentiate it sufficiently from the complete set of financial

statements, the auditor shall ask management to rectify the situation. Subject to paragraphs 15

and 16, the auditor shall also differentiate the opinion on the single financial statement or on the

specific element of a financial statement from the opinion on the complete set of financial

statements. The auditor shall not issue the auditor's report containing the opinion on the single

financial statement or on the specific element of a financial statement until satisfied with the

differentiation.

Considering the Implications of Certain Matters Included in the Auditor's Report on the Entity's Complete

Set of Financial Statements for the Audit of the Single Financial Statement or the Specific Element of a

Financial Statement and for the Auditor's Report Thereon

14. If the auditor's report on an entity's complete set of financial statements includes:

(a) A modified opinion in accordance with ISA (UK) 705 (Revised June 2016);9

(b) An Emphasis of Matter paragraph or an Other Matter paragraph in accordance with ISA

(UK) 706 (Revised June 2016),10

(c) A Material Uncertainty Related to Going Concern section in accordance with ISA (UK) 570

(Revised June 2016);11

6 ISA (UK) 200 (Revised June 2016), paragraph 2.

7 ISA (UK) 200 (Revised June 2016), paragraph 13(f), explains that the term "financial statements" ordinarily refers to a

complete set of financial statements as determined by the requirements of the applicable financial reporting framework.

8 ISA (UK) 700 (Revised June 2016), Forming an Opinion and Reporting on Financial Statements.

9 ISA (UK) 705 (Revised June 2016), Modifications to the Opinion in the Independent Auditor's Report.

10 ISA (UK) 706 (Revised June 2016), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent

Auditor's Report.

11 ISA (UK) 570 (Revised June 2016), Going Concern, paragraph 22.


(d) Communication of key audit matters in accordance with ISA (UK) 701;12 or

(e) A statement that describes an uncorrected material misstatement of the other information

in accordance with ISA (UK) 720 (Revised June 2016);13

the auditor shall consider the implications, if any, that these matters have for the audit of the single

financial statement or of the specific element of a financial statement and for the auditor's report

thereon. (Ref: Para. A23–A27)

Adverse Opinion or Disclaimer of Opinion in the Auditor's Report on the Entity's Complete Set of

Financial Statements

15. If the auditor concludes that it is necessary to express an adverse opinion or disclaim an opinion

on the entity's complete set of financial statements as a whole, ISA (UK) 705 (Revised June 2016)

does not permit the auditor to include in the same auditor's report an unmodified opinion on a

single financial statement that forms part of those financial statements or on a specific element

of those financial statements.14 This is because such an unmodified opinion would contradict the

adverse opinion or disclaimer of opinion on the entity's complete set of financial statements as a

whole. (Ref: Para. A28)

16. If the auditor concludes that it is necessary to express an adverse opinion or disclaim an opinion

on the entity's complete set of financial statements as a whole but, in the context of a separate

audit of a specific element of those financial statements, the auditor nevertheless considers it

appropriate to express an unmodified opinion on that element, the auditor shall only do so if:

(a) The auditor is not prohibited by law or regulation from doing so;

(b) That opinion is expressed in an auditor's report that is not published together with the

auditor's report containing the adverse opinion or disclaimer of opinion; and

(c) The element does not constitute a major portion of the entity's complete set of financial

statements.

17. The auditor shall not express an unmodified opinion on a single financial statement of a complete

set of financial statements if the auditor has expressed an adverse opinion or disclaimed an

opinion on the complete set of financial statements as a whole. This is the case even if the

auditor's report on the single financial statement is not published together with the auditor's report

containing the adverse opinion or disclaimer of opinion. This is because a single financial

statement is deemed to constitute a major portion of those financial statements.

***

Application and Other Explanatory Material

Scope of this ISA (UK) (Ref: Para. 1, 6(c))

A1. ISA (UK) 200 (Revised June 2016) defines the term "historical financial information" as

information expressed in financial terms in relation to a particular entity, derived primarily from

that entity's accounting system, about economic events occurring in past time periods or about

economic conditions or circumstances at points in time in the past.15

12 ISA (UK) 701, Communicating Key Audit Matters in the Independent Auditor's Report, paragraph 13.

13 ISA (UK) 720 (Revised June 2016), The Auditor's Responsibilities Relating to Other Information, paragraph 22(e)(ii).


15 ISA (UK) 200 (Revised June 2016), paragraph 13(g).


A2. ISA (UK) 200 (Revised June 2016) defines the term "financial statements" as a structured

representation of historical financial information, including disclosures, intended to communicate

an entity's economic resources or obligations at a point in time or the changes therein for a period

of time in accordance with a financial reporting framework. The term "financial statements"

ordinarily refers to a complete set of financial statements as determined by the requirements of

the applicable financial reporting framework, but can also refer to a single financial statement.

Disclosures comprise explanatory or descriptive information, set out as required, expressly

permitted or otherwise allowed by the applicable financial reporting framework, on the face of a

financial statement, or in the notes, or incorporated therein by cross-reference.16 As noted in

paragraph 6(c), reference to a single financial statement or specific element of a financial

statement includes the related disclosures.

A3. ISAs (UK) are written in the context of an audit of financial statements;17 they are to be adapted

as necessary in the circumstances when applied to an audit of other historical financial

information, such as a single financial statement or a specific element of a financial statement.

This ISA (UK) assists in this regard. (Appendix 1 lists examples of such other historical financial

information.)

A4. A reasonable assurance engagement other than an audit of historical financial information is

performed in accordance with International Standard on Assurance Engagements (ISAE) 3000

(Revised).18

Considerations When Accepting the Engagement

Application of ISAs (UK) (Ref: Para. 7)

A5. ISA (UK) 200 (Revised June 2016) requires the auditor to comply with (a) relevant ethical

requirements, including those pertaining to independence, relating to financial statement audit

engagements, and (b) all ISAs (UK) relevant to the audit. It also requires the auditor to comply

with each requirement of an ISA (UK) unless, in the circumstances of the audit, the entire ISA

(UK) is not relevant or the requirement is not relevant because it is conditional and the condition

does not exist. In exceptional circumstances, the auditor may judge it necessary to depart from a

relevant requirement in an ISA (UK) by performing alternative audit procedures to achieve the

aim of that requirement.19

A6. Compliance with the requirements of ISAs (UK) relevant to the audit of a single financial

statement or of a specific element of a financial statement may not be practicable when the

auditor is not also engaged to audit the entity's complete set of financial statements. In such

cases, the auditor often does not have the same understanding of the entity and its environment,

including its internal control, as an auditor who also audits the entity's complete set of financial

statements. The auditor also does not have the audit evidence about the general quality of the

accounting records or other accounting information that would be acquired in an audit of the

entity's complete set of financial statements. Accordingly, the auditor may need further evidence

to corroborate audit evidence acquired from the accounting records. In the case of an audit of a

specific element of a financial statement, certain ISAs (UK) require audit work that may be

disproportionate to the element being audited. For example, although the requirements of ISA

(UK) 570 (Revised June 2016) are likely to be relevant in the circumstances of an audit of a

schedule of accounts receivable, complying with those requirements may not be practicable

16 ISA (UK) 200 (Revised June 2016), paragraph 13(f).


18 ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

19 ISA (UK) 200 (Revised June 2016), paragraphs 14, 18, and 22–23.


because of the audit effort required. If the auditor concludes that an audit of a single financial

statement or of a specific element of a financial statement in accordance with ISAs (UK) may not

be practicable, the auditor may discuss with management whether another type of engagement

might be more practicable.

Acceptability of the Financial Reporting Framework (Ref: Para. 8)

A7. A single financial statement or a specific element of a financial statement may be prepared in

accordance with an applicable financial reporting framework that is based on a financial reporting

framework established by an authorized or recognized standards setting organization for the

preparation of a complete set of financial statements (for example IFRSs). If this is the case,

determination of the acceptability of the applicable framework may involve considering whether

that framework includes all the requirements of the framework on which it is based that are

relevant to the presentation of a single financial statement or of a specific element of a financial

statement that provides adequate disclosures.

Form of Opinion (Ref: Para. 9)

A8. The form of opinion to be expressed by the auditor depends on the applicable financial reporting

framework and any applicable laws or regulations.20 In accordance with ISA (UK) 700 (Revised

June 2016):21

(a) When expressing an unmodified opinion on a complete set of financial statements prepared

in accordance with a fair presentation framework, the auditor's opinion, unless otherwise

required by law or regulation, uses one of the following phrases:

(i) the financial statements present fairly, in all material respects, in accordance with

[the applicable financial reporting framework]; or

(ii) the financial statements give a true and fair view in accordance with [the applicable

financial reporting framework]; and

(b) When expressing an unmodified opinion on a complete set of financial statements prepared

in accordance with a compliance framework, the auditor's opinion states that the financial

statements are prepared, in all material respects, in accordance with [the applicable

financial reporting framework].

A9. In the case of a single financial statement or of a specific element of a financial statement, the

applicable financial reporting framework may not explicitly address the presentation of the

financial statement or of the specific element of the financial statement. This may be the case

when the applicable financial reporting framework is based on a financial reporting framework

established by an authorized or recognized standards setting organization for the preparation of

a complete set of financial statements (for example, IFRSs). The auditor therefore considers

whether the expected form of opinion is appropriate in the light of the applicable financial reporting

framework. Factors that may affect the auditor's consideration as to whether to use the phrases

"presents fairly, in all material respects," or "gives a true and fair view" in the auditor's opinion

include:

Whether the applicable financial reporting framework is explicitly or implicitly restricted to

the preparation of a complete set of financial statements.

Whether the single financial statement or the specific element of a financial statement will:


21 ISA (UK) 700 (Revised June 2016), paragraphs 25–26.


○ Comply fully with each of those requirements of the framework relevant to the

particular financial statement or the particular element, and the presentation of the

financial statement or the specific element of a financial statement include the related

disclosures.

○ If necessary to achieve fair presentation, provide disclosures beyond those

specifically required by the framework or, in exceptional circumstances, depart from

a requirement of the framework.

The auditor's decision as to the expected form of opinion is a matter of professional judgment. It

may be affected by whether use of the phrases "presents fairly, in all material respects," or "gives

a true and fair view" in the auditor's opinion on a single financial statement or on a specific element

of a financial statement prepared in accordance with a fair presentation framework is generally

accepted in the particular jurisdiction.

Considerations When Planning and Performing the Audit (Ref: Para. 10)

A10. The relevance of each of the ISAs (UK) requires careful consideration. Even when only a specific

element of a financial statement is the subject of the audit, ISAs (UK) such as ISA (UK) 240

(Revised June 2016),22 ISA (UK) 55023 and ISA (UK) 570 (Revised June 2016) are, in principle,

relevant. This is because the element could be misstated as a result of fraud, the effect of related

party transactions, or the incorrect application of the going concern basis of accounting under the

applicable financial reporting framework.

A11. ISA (UK) 260 (Revised June 2016) requires the auditor to determine the appropriate person(s)

within the entity's governance structure with whom to communicate.24 ISA (UK) 260 (Revised

June 2016) notes that, in some cases, all of those charged with governance are involved in

managing the entity, and the application of communication requirements is modified to recognize

this position.25 When a complete set of financial statements is also prepared by the entity, those

person(s) responsible for the oversight of the preparation of the single financial statement or the

element may not be the same as those charged with governance responsible for the oversight of

the preparation of the complete set of financial statements.

A12. Furthermore, ISAs (UK) are written in the context of an audit of financial statements; they are to

be adapted as necessary in the circumstances when applied to the audit of a single financial

statement26 or of a specific element of a financial statement. For example, written representations

from management about the complete set of financial statements would be replaced by written

representations about the presentation of the financial statement or the element in accordance

with the applicable financial reporting framework.

A13. Matters included in the auditor's report on the complete set of financial statements may have

implications for the audit of a single financial statement or of an element of a financial statement

(see paragraph 14). When planning and performing an audit of a single financial statement or a

specific element of a financial statement in conjunction with the audit of the entity's complete set

of financial statements, the auditor may be able to use audit evidence obtained as part of the

audit of the entity's complete set of financial statements in the audit of the financial statement or

the element. ISAs (UK), however, require the auditor to plan and perform the audit of the financial

22 ISA (UK) 240 (Revised June 2016), The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements.

23 ISA (UK) 550, Related Parties.

24 ISA (UK) 260 (Revised June 2016), Communication with Those Charged with Governance, paragraph 11.

25 ISA (UK) 260 (Revised June 2016), paragraph 10(b), 13, A1 (third bullet), A2 and A8.



statement or element to obtain sufficient appropriate audit evidence on which to base the opinion

on the financial statement or on the element.

A14. The individual financial statements that comprise a complete set of financial statements, and

many of the specific elements of those financial statements, including their related disclosures,

are interrelated. Accordingly, when auditing a single financial statement or a specific element of

a financial statement, the auditor may not be able to consider the financial statement or the

element in isolation. Consequently, the auditor may need to perform procedures in relation to the

interrelated items to meet the objective of the audit.

A15. Furthermore, the materiality determined for a single financial statement or for a specific element

of a financial statement may be lower than the materiality determined for the entity's complete set

of financial statements; this will affect the nature, timing and extent of the audit procedures and

the evaluation of uncorrected misstatements.

Forming an Opinion and Reporting Considerations (Ref: Para. 11)

A16. ISA (UK) 700 (Revised June 2016) requires the auditor, in forming an opinion, to evaluate whether

the financial statements provide adequate disclosures to enable the intended users to understand

the effect of material transactions and events on the information conveyed in the financial

statements.27 In the case of a single financial statement or of a specific element of a financial

statement, it is important that the financial statement or the element, in view of the requirements

of the applicable financial reporting framework, provides adequate disclosures to enable the

intended users to understand the information conveyed in the financial statement or the element,

and the effect of material transactions and events on the information conveyed in the financial

statement or the element.

A17. Appendix 227a contains illustrations of independent auditor's reports on a single financial

statement and on a specific element of a financial statement. Other illustrations of auditor's

reports may be relevant to reporting on a single financial statement or on a specific element of a

financial statement (see, for example, the Appendices to ISA (UK) 700 (Revised June 2016), ISA

(UK) 705 (Revised June 2016), ISA (UK) 570 (Revised June 2016), ISA (UK) 720 (Revised June

2016), and ISA (UK) 706 (Revised June 2016)).

Application of ISA (UK) 700 (Revised June 2016) When Reporting on a Single Financial Statement or

on a Specific Element of a Financial Statement

A18. Paragraph 11 of this ISA (UK) explains that the auditor is required to apply the requirements in

ISA (UK) 700 (Revised June 2016), adapted as necessary in the circumstances of the

engagement, when forming an opinion and reporting on a single financial statement or on a

specific element of a financial statement. In doing so, the auditor is also required to apply the

reporting requirements in other ISAs (UK) adapted as necessary in the circumstances of the

engagement, and may find the considerations addressed in paragraphs A19–A21 below helpful.

Going Concern

A19. Depending on the applicable financial reporting framework used in the preparation of the single

financial statement or the specific element of a financial statement, the description in the auditor's

report of management's responsibilities28 relating to going concern may need to be adapted as

27 ISA (UK) 700 (Revised June 2016), paragraph 13(e).

27a The examples in the Appendix have not been tailored for the UK.

28 See ISA (UK) 700 (Revised June 2016), paragraphs 34(b) and A48.


necessary. The description in the auditor's report of the auditor's responsibilities29 may also need

to be adapted as necessary depending on how ISA (UK) 570 (Revised June 2016) applies in the

circumstances of the engagement.

Key Audit Matters

A20. ISA (UK) 700 (Revised June 2016) requires the auditor to communicate key audit matters in

accordance with ISA (UK) 701 for audits of complete sets of general purpose financial statements

of listed entities.30 For audits of a single financial statement or a specific element of a financial

statement, ISA (UK) 701 only applies when communication of key audit matters in the auditor's

report on such financial statements or elements is required by law or regulation, or the auditor

otherwise decides to communicate key audit matters. When key audit matters are communicated

in the auditor's report on a single financial statement or a specific element of a financial statement,

ISA (UK) 701 applies in its entirety.31

Other Information

A21. ISA (UK) 720 (Revised June 2016) deals with the auditor's responsibilities relating to other

information. In the context of this ISA (UK), reports containing or accompanying the single

financial statement or specific element of a financial statement—the purpose of which is to

provide owners (or similar stakeholders) with information on matters presented in the single

financial statement or the specific element of a financial statement—are considered to be annual

reports for purposes of ISA (UK) 720 (Revised June 2016). When the auditor determines that the

entity plans to issue such a report, the requirements in ISA (UK) 720 (Revised June 2016) apply

to the audit of the single financial statement or the element.

Name of the Engagement Partner

A22. The requirement in ISA (UK) 700 (Revised June 2016) for the auditor to include the name of the

engagement partner in the auditor's report also applies to audits of single financial statements of

listed entities or specific elements of financial statements of listed entities.32 The auditor may be

required by law or regulation to include the name of the engagement partner in the auditor's report

or may otherwise decide to do so when reporting on a single financial statement or on an element

of a financial statement of entities other than listed entities.

Reporting on the Entity's Complete Set of Financial Statements and on a Single Financial Statement

or on a Specific Element of a Financial Statement (Ref: Para. 14)

Considering the Implications of Certain Matters Included in the Auditor's Report on the Entity's Complete

Set of Financial Statements for the Audit of the Single Financial Statement or the Specific Element of a

Financial Statement and for the Auditor's Report Thereon

A23. Paragraph 14 requires the auditor to consider the implications, if any, of certain matters included

in the auditor's report on the complete set of financial statements for the audit of the single

financial statement or the specific element of a financial statement and for the auditor's report

thereon. Considering whether a matter included in the auditor's report on the complete set of

financial statements is relevant in the context of an engagement to report on a single financial

statement or a specific element of a financial statement involves professional judgment.

29 See ISA (UK) 700 (Revised June 2016), paragraphs 39(b)(iv).



32 See ISA (UK) 700 (Revised June 2016), paragraphs 46 and A61–A63.


A24. Factors that may be relevant in considering those implications include:

The nature of the matter(s) being described in the auditor's report on the complete set of

financial statements and the extent to which it relates to what is included in the single

financial statement or a specific element of a financial statement.

The pervasiveness of the matter(s) described in the auditor's report on the complete set of

financial statements.

The nature and extent of the differences between the applicable financial reporting

frameworks.

The extent of the difference between the period(s) covered by the complete set of the

financial statements compared to the period(s) or dates of the single financial statement or

the element of a financial statement.

The time elapsed since the date of the auditor's report on the complete set of the financial

statements.

A25. For example, in the case when there is a qualification of the auditor's opinion in relation to

accounts receivable in the auditor's report on the complete set of financial statements, and the

single financial statement includes accounts receivable, or the specific element of a financial

statement relates to accounts receivable, it is likely that there would be implications for the audit.

On the other hand, if the qualification of the auditor's opinion on the complete set of financial

statements relates to classification of long-term debt, then it is less likely that there would be

implications for an audit of the single financial statement that is the income statement, or if the

specific element of the financial statement relates to accounts receivable.

A26. Key audit matters that are communicated in the auditor's report on the complete set of financial

statements may have implications for an audit of a single financial statement or the specific

element of the financial statement. The information included in the Key Audit Matters section

about how the matter was addressed in the audit of the complete set of financial statements may

be useful to the auditor's determination of how to address the matter when it is relevant to the

audit of the single financial statement or the specific element of the financial statement.

Inclusion of a reference to the auditor's report on the complete set of financial statements

A27. Even when certain matters included in the auditor's report on the complete set of financial

statements do not have implications for the audit of, or for the auditor's report on, the single

financial statement or the specific element of a financial statement, the auditor may deem it

appropriate to refer to the matter(s) in an Other Matter paragraph in an auditor's report on the

single financial statement or on the specific element of a financial statement (see ISA (UK) 706

Revised June 2016)).33 For example, the auditor may consider it appropriate to refer in the

auditor's report on the single financial statement or a specific element of the financial statement

to a Material Uncertainty Related to Going Concern section included in the auditor's report on the

complete set of financial statements.

Adverse Opinion or Disclaimer of Opinion in the Auditor's Report on the Entity's Complete Set of

Financial Statements (Ref: Para. 15)

A28. In the auditor's report on an entity's complete set of financial statements, the expression of a

disclaimer of opinion regarding the results of operations and cash flows, where relevant, and an

unmodified opinion regarding the financial position is permitted since the disclaimer of opinion is

33 See ISA (UK) 706 (Revised June 2016), paragraphs 10–11.


being issued in respect of the results of operations and cash flows only and not in respect of the

financial statements as a whole.34

34 ISA (UK) 510 (Revised June 2016), Initial Audit Engagements—Opening Balances, paragraph A8, and ISA 705 (Revised),

paragraph A16.

ISA (UK) 805 (REVISED), SPECIAL CONSIDERATIONS—AUDITS OF SINGLE FINANCIAL STATEMENTS AND SPECIFIC ELEMENTS, ACCOUNTS OR ITEMS OF A FINANCIAL STATEMENT (MARKED FROM EXTANT)

13

Appendix 1

(Ref: Para. A3)

Examples of Specific Elements, Accounts or Items of a Financial Statement

Accounts receivable, allowance for doubtful accounts receivable, inventory, the liability for accrued

benefits of a private pension plan, the recorded value of identified intangible assets, or the liability

for "incurred but not reported" claims in an insurance portfolio, including related notes.

A schedule of externally managed assets and income of a private pension plan, including related

notes.

A schedule of net tangible assets, including related notes.

A schedule of disbursements in relation to a lease property, including explanatory notes.

A schedule of profit participation or employee bonuses, including explanatory notes.

ISA (UK) 805 (REVISED), SPECIAL CONSIDERATIONS—AUDITS OF SINGLE FINANCIAL STATEMENTS AND SPECIFIC ELEMENTS, ACCOUNTS OR ITEMS OF A FINANCIAL STATEMENT (MARKED FROM EXTANT)

14

Appendix 2

(Ref: Para. A17)

Illustrations of Independent Auditor's' Reports on a Single Financial Statement and on a Specific Element of a Financial Statement

The examples in the Appendix have not been tailored for the UK.

Illustration 1: An auditor's report on a single financial statement of an entity other than a listed

entity prepared in accordance with a general purpose framework (for purposes of this illustration,

a fair presentation framework).

Illustration 2: An auditor's report on a single financial statement of an entity other than a listed

entity prepared in accordance with a special purpose framework (for purposes of this illustration,

a fair presentation framework).

Illustration 3: An auditor's report on a specific element of a financial statement of a listed entity

prepared in accordance with a special purpose framework (for purposes of this illustration, a

compliance framework).

15

Illustration 1: An auditor's report on a single financial statement of an entity other than a

listed entity prepared in accordance with a general purpose framework (for purposes of this

illustration, a fair presentation framework).

For purposes of this illustrative auditor's report, the following circumstances are assumed:

Audit of a balance sheet (that is, a single financial statement) of an entity other than a listed

entity.

The balance sheet has been prepared by management of the entity in accordance with the

requirements of the Financial Reporting Framework in Jurisdiction X relevant to preparing a

balance sheet.

The terms of the audit engagement reflect the description of management's responsibility for

the financial statements in ISA 210.

The applicable financial reporting framework is a fair presentation framework designed to

meet the common financial information needs of a wide range of users.

The auditor has determined that it is appropriate to use the phrase "presents fairly, in all

material respects," in the auditor's opinion.

The relevant ethical requirements that apply to the audit are those of the jurisdiction.

Based on the audit evidence obtained, the auditor has concluded that a material uncertainty

exists related to events or conditions that may cast significant doubt on the entity's ability to

continue as a going concern in accordance with ISA 570 (Revised). The disclosure of the

material uncertainty in the single financial statement is adequate.

The auditor is not required, and has otherwise not decided, to communicate key audit matters

in accordance with ISA 701 in the context of the audit of the balance sheet.

The auditor has determined that there is no other information (i.e., the requirements of ISA

720 (Revised) do not apply).

Those responsible for oversight of the financial statement differ from those responsible for

the preparation of the financial statement.

The auditor has no other reporting responsibilities required under local law or regulation.

INDEPENDENT AUDITOR'S REPORT

[Appropriate Addressee]

Opinion

We have audited the balance sheet of ABC Company (the Company) as at December 31, 20X1 and

notes to the financial statement, including a summary of significant accounting policies (together "the

financial statement").

In our opinion, the accompanying financial statement presents fairly, in all material respects, the

financial position of the Company as at December 31, 20X1 in accordance with those requirements of

the Financial Reporting Framework in Jurisdiction X relevant to preparing such a financial statement.

[Opinion section positioned first as required in ISA 700 (Revised)]

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities

under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial

Statement section of our report. We are independent of the Company in accordance with the ethical

requirements that are relevant to our audit of the financial statement in [jurisdiction], and we have fulfilled

16

our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence

we have obtained is sufficient and appropriate to provide a basis for our opinion. [The first and last

sentences in this section used to be in the Auditor's Responsibility section. Also, the Basis for Opinion

section is positioned immediately after the Opinion section as required in ISA 700 (Revised).]

Material Uncertainty Related to Going Concern

We draw attention to Note 6 in the financial statement, which indicates that the Company incurred a net

loss of ZZZ during the year ended December 31, 20X1 and, as of that date, the Company's current

liabilities exceeded its total assets by YYY. As stated in Note 6, these events or conditions, along with

other matters as set forth in Note 6, indicate that a material uncertainty exists that may cast significant doubt

on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Responsibilities of Management and Those Charged with Governance for the Financial

Statement35

Management is responsible for the preparation and fair presentation of the financial statement in

accordance with those requirements of the Financial Reporting Framework in Jurisdiction X relevant to

preparing such a financial statement, and for such internal control as management determines is

necessary to enable the preparation of a financial statement that is free from material misstatement,

whether due to fraud or error.

In preparing the financial statement, management is responsible for assessing the Company's ability to

continue as a going concern, disclosing, as applicable, matters relating to going concern and using the

going concern basis of accounting unless management either intends to liquidate the Company or to

cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting

process.

Auditor's Responsibilities for the Audit of the Financial Statement

Our objectives are to obtain reasonable assurance about whether the financial statement as a whole is

free from material misstatement, whether due to fraud or error, and to issue an auditor's report that

includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an

audit conducted in accordance with ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of this

financial statement.

35 Throughout these illustrative auditor's reports, the terms management and those charged with governance may need to be

replaced by another term that is appropriate in the context of the legal framework in the particular jurisdiction.

17

Paragraph 41(b) of ISA 700 (Revised) explains that the shaded material below can be located in an Appendix to the auditor's

report. Paragraph 41(c) of ISA 700 (Revised) explains that when law, regulation or national auditing standards expressly permit,

reference can be made to a website of an appropriate authority that contains the description of the auditor's responsibilities, rather

than including this material in the auditor's report, provided that the description on the website addresses, and is not inconsistent

with, the description of the auditor's responsibilities below.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain

professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statement, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Company's internal control.36

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates, if any, and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events

or conditions that may cast significant doubt on the Company's ability to continue as a going

concern. If we conclude that a material uncertainty exists, we are required to draw attention in

our auditor's report to the related disclosures in the financial statements or, if such disclosures

are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained

up to the date of our auditor's report. However, future events or conditions may cause the

Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statement, including the

disclosures, and whether the financial statement represents the underlying transactions and

events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope

and timing of the audit and significant audit findings, including any significant deficiencies in internal control

that we identify during our audit.

[Signature in the name of the audit firm, the personal name of the auditor, or both, as appropriate for

the particular jurisdiction]

[Auditor address] [Placement of date and address reversed)]

[Date]

36 This sentence would be modified, as appropriate, in circumstances when the auditor also has responsibility to issue an

opinion on the effectiveness of internal control in conjunction with the audit of the financial statement.

18

Illustration 2: An auditor's report on a single financial statement of an entity other than a

listed entity prepared in accordance with a special purpose framework.

For purposes of this illustrative auditor's report, the following Circumstances are assumed:

Audit of a statement of cash receipts and disbursements (that is, a single financial statement)

of an entity other than a listed entity.

An auditor's report on the complete set of financial statements was not issued.

The financial statement has been prepared by management of the entity in accordance with

the cash receipts and disbursements basis of accounting to respond to a request for cash

flow information received from a creditor. Management has a choice of financial reporting

frameworks.

The applicable financial reporting framework is a fair presentation framework designed to

meet the financial information needs of specific users.37

The auditor has concluded an unmodified (i.e., "clean") opinion is appropriate based on the

audit evidence obtained.

The auditor has determined that it is appropriate to use the phrase "presents fairly, in all

material respects," in the auditor's opinion.


Distribution or use of the auditor's report is not restricted.


does not exist related to events or conditions that may cast significant doubt on the entity's

ability to continue as a going concern in accordance with ISA 570 (Revised).

The auditor is not required, and has otherwise not decided, to communicate key audit matters

in accordance with ISA 701 in the context of the audit of the statement of cash receipts and

disbursements.



Management is responsible for the preparation of the financial statement and oversight of the

financial reporting process to prepare this financial statement.



[Appropriate Addressee]

Opinion

We have audited the statement of cash receipts and disbursements of ABC Company (the Company)

for the year ended December 31, 20X1 and notes to the statement of cash receipts and disbursements,

including a summary of significant accounting policies (together "the financial statement").

In our opinion, the accompanying financial statement presents fairly, in all material respects, the cash

receipts and disbursements of the Company for the year ended December 31, 20X1 in accordance with

the cash receipts and disbursements basis of accounting described in Note X. [Opinion section

positioned first as required in ISA 700 (Revised)]

37 ISA 800 (Revised) contains requirements and guidance on the form and content of financial statements prepared in

accordance with a special purpose framework.

19

Basis for Opinion


under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial

Statement section of our report. We are independent of the Company in accordance with the ethical

requirements that are relevant to our audit of the financial statement in [jurisdiction], and we have fulfilled

our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence

we have obtained is sufficient and appropriate to provide a basis for our opinion. [The first and last sentences

in this section used to be in the Auditor's Responsibility section. Also, the Basis for Opinion section is

positioned immediately after the Opinion section as required in ISA 700 (Revised).]

Emphasis of Matter – Basis of Accounting

We draw attention to Note X to the financial statement, which describes the basis of accounting. The

financial statement is prepared to provide information to XYZ Creditor. As a result, the statement may

not be suitable for another purpose. Our opinion is not modified in respect of this matter.

Responsibilities of Management and Those Charged with Governance for the Financial

Statement38

Management is responsible for preparation and fair presentation of the financial statement in

accordance with the cash receipts and disbursements basis of accounting described in Note X; this

includes determining that the cash receipts and disbursements basis of accounting is an acceptable

basis for the preparation of the financial statement in the circumstances, and for such internal control

as management determines is necessary to enable the preparation of a financial statement that is free

from material misstatement, whether due to fraud or error.

In preparing the financial statement, management is responsible for assessing the Company's ability to

continue as a going concern, disclosing, as applicable, matters relating to going concern and using the

going concern basis of accounting unless management either intends to liquidate the Company or to

cease operations, or has no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the Financial Statement

Our objectives are to obtain reasonable assurance about whether the financial statement as a whole is

free from material misstatement, whether due to fraud or error, and to issue an auditor's report that

includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an

audit conducted in accordance with ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of this

financial statement.

38 Or other terms that are appropriate in the context of the legal framework in the particular jurisdiction.

20








Identify and assess the risks of material misstatement of the financial statement, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal control.





and based on the audit evidence obtained, whether a material uncertainty exists related to events



our auditor's report to the related disclosures in the financial statement or, if such disclosures are

inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up

to the date of our auditor's report. However, future events or conditions may cause the Company

to cease to continue as a going concern.



Evaluate the overall presentation, structure and content of the financial statement, including the

disclosures, and whether the financial statement represents the underlying transactions and

events in a manner that achieves fair presentation.







[Date]


opinion on the effectiveness of internal control in conjunction with the audit of the financial statement.

21

Illustration 3: An auditor's report on a specific element of a financial statement of a listed

entity prepared in accordance with a special purpose framework.

For purposes of this illustrative auditor's report, the following circumstances are assumed:

Audit of an accounts receivable schedule (that is, element, account or item of a financial

statement).

The financial information has been prepared by management of the entity in accordance with

the financial reporting provisions established by a regulator to meet the requirements of that

regulator. Management does not have a choice of financial reporting frameworks.

The applicable financial reporting framework is a compliance framework designed to meet

the financial information needs of specific users.40

The terms of the audit engagement reflect the description of management's responsibility for

the financial statements in ISA 210.

The auditor has concluded an unmodified (i.e., "clean") opinion is appropriate based on the

audit evidence obtained.


Distribution of the auditor's report is restricted.


does not exist related to events or conditions that may cast significant doubt on the entity's

ability to continue as a going concern in accordance with ISA 570 (Revised).

The auditor is not required, and has otherwise not decided to communicate key audit matters

in accordance with ISA 701 in the context of the audit of the accounts receivable schedule.



Those responsible for oversight of the financial statement differ from those responsible for

the preparation of the financial statement.



[To the Shareholders of ABC Company or Other Appropriate Addressee]

Opinion

We have audited the accounts receivable schedule of ABC Company (the Company) as at December

31, 20X1 ("the schedule").

In our opinion, the financial information in the schedule the Company as at December 31, 20X1 is

prepared, in all material respects, in accordance with [describe the financial reporting provisions

established by the regulator]. [Opinion section positioned first as required ISA 700 (Revised)]

Basis for Opinion


under those standards are further described in the Auditor's Responsibilities for the Audit of the Schedule

section of our report. We are independent of the Company in accordance with the ethical requirements that

are relevant to our audit of the schedule in [jurisdiction], and we have fulfilled our other ethical responsibilities

in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient

40 ISA 800 (Revised) contains requirements and guidance on the form and content of financial statements prepared in

accordance with a special purpose framework.

22

and appropriate to provide a basis for our opinion. [The first and last sentences in this section used to be in

the Auditor's Responsibility section. Also, the Basis for Opinion section is positioned immediately after

opinion section as required in ISA 700 (Revised).]

Emphasis of Matter – Basis of Accounting and Restriction on Distribution

We draw attention to Note X to the schedule, which describes the basis of accounting. The schedule is

prepared to assist the Company to meet the requirements of Regulator DEF. As a result, the schedule

may not be suitable for another purpose. Our report is intended solely for the Company and Regulator

DEF and should not be distributed to parties other than the Company or Regulator DEF. Our opinion is

not modified in respect of this matter.

Responsibilities of Management and Those Charged with Governance for the Schedule41

Management is responsible for the preparation of the schedule in accordance with [describe the

financial reporting provisions established by the regulator], and for such internal control as

management determines is necessary to enable the preparation of the schedule that is free from

material misstatement, whether due to fraud or error.

In preparing the schedule, management is responsible for assessing the Company's ability to continue

as a going concern, disclosing, as applicable, matters relating to going concern and using the going

concern basis of accounting unless management either intends to liquidate the Company or to cease

operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting

process.

Auditor's Responsibilities for the Audit of the Schedule

Our objectives are to obtain reasonable assurance about whether the schedule is free from material

misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise

from fraud or error and are considered material if, individually or in the aggregate, they could reasonably

be expected to influence the economic decisions of users taken on the basis of this schedule.








Identify and assess the risks of material misstatement of the schedule, whether due to fraud or

error, design and perform audit procedures responsive to those risks, and obtain audit evidence

that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a

material misstatement resulting from fraud is higher than for one resulting from error, as fraud

41 Or other terms that are appropriate in the context of the legal framework in the particular jurisdiction.

23

may involve collusion, forgery, intentional omissions, misrepresentations, or the override of

internal control.





and, based on the audit evidence obtained, whether a material uncertainty exists related to events



our auditor's report to the related disclosures in the schedule or, if such disclosures are

inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up

to the date of our auditor's report. However, future events or conditions may cause the Company

to cease to continue as a going concern.






We also provide those charged with governance with a statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other matters

that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is [name].




[Date]


opinion on the effectiveness of internal control in conjunction with the audit of the schedule.

Financial Reporting Council8th Floor125 London WallLondon EC2Y 5AS

+44 (0)20 7492 2300

www.frc.org.uk

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